Posted by JPiper on November 07, 1998 at 03:32:23:
Just thought I would point out that this is a land contract. Therefore it may not be foreclosed “non-judicially” even in California.
California is a deed of trust state. Defaulted loans may be foreclosed upon non-judicially under their deed of trust. They may also be foreclosed judicially, although most lenders will not take this option.
But again, in this case this is a land contract. There is no deed of trust to foreclose through a trustee. If there is to be a foreclosure it must be judicially.
I sold some property on a land contract a few years ago…he’s been real good about making payments but has missed the last couple because of some serious illness. I hope it never comes to foreclosure but if it does I don’t even know how to start the process. Just some basic info would be appreciated.
Posted by Jim Gibson on November 07, 1998 at 03:18:23:
The foreclosure question really hinges around how much equity is in the property and how much of a hit you are willing to take. In a non-judicial foreclosure state like California, dont bother with the expense of an attorney. Immediately contact a Trustee and ask them some particulars. If there is sufficient equity in the property, you will loose nothing. All foreclosure expenses, back payments, penalties etc… get tacked onto the loan amount and you either get paid off in cash at the trustee sale or get the property back. One thing is sure, you must act very quickly. The equity is melting away before your eyes. If the owner can come up with the payments, the default will be cancelled anyway. It is extremely important to act as quickly as possible. Just do it. Then, you can talk to the owner about signing the property over to you or some other remedy. I NEVER recommend paying someone in that situation. Speak with them but be firm. They will normally respect your position more for that.
Posted by JPiper on November 07, 1998 at 02:36:33:
Willy:
I would read your land contract. It probably has a clause covering what happens when the buyer defaults.
My land contract says that if the buyer defaults, I provide notice that they are in default, and if they fail to remedy, I record a quit claim deed terminating their interest, their status reverts to that of a renter, and I may evict.
This process may or may not be legal in your particular state. But step one is to read your contract, to determine the default provisions. Step 2 is to contact an attorney to find out whether your contract can be enforced in your state.
R Porter makes a good point regarding paying the buyer to leave. Chances are this would be cheaper than a foreclosure if that’s what you are required to do in your state.
Check with a local attorney that specializes in foreclosures. If you live in a small town, check with foreclosure attorneys in a major nearby city. They can fill you in on the process.
In some states, like Ohio, you can request a forfeiture of the land contract if the buyer has less than 20% equity in the property or if the land contract is less than 5 years old. A forfeitrue is a much quicker process than a foreclosure, very similar to an eviction.
Before it gets that far, why not talk to your buyer and try to come to an amicable solution to the problem? If he has been a good buyer and has taken care of the property, give him some cash and have him move out of the house and sign a release. Its a win-win for both parties. He gets some money, you get the house back with no hassels, and you can turn around and resell it on land contract to another buyer for a higher price and collect another downpayment.